OFW remittances down 3% in Oct. at $2.099B
REMITTANCES slipped in October to a nine-month low due to foreign exchange fluctuations, the central bank said yesterday, but remained on track to hit the central bank’s forecast for the entire year.
Money sent home by overseas Filipino workers (OFWs) slipped by 3% year on year to $ 2.099 billion, which was also lower compared with $2.383 billion in September, the Bangko Sentral ng Pilipinas (BSP) said.
The October total is the lowest since the $ 1.997- billion inflow logged in January, although receipts have been sustained at the $2-billion level since February.
Contributions from both land and sea-based workers dropped during the month, led by an 11.1% slide among those working at sea due to “stiffer competition” in the supply of seafarers in East Asia and Eastern Europe. Cash remittances from land-based employees also dipped by 0.6%, the BSP said.
Foreign currency movements also added to the monthly decline.
“The lower US dollar value of remittances in October may also be partly due to the depreciation of major host countries’ currencies vis-a-vis the US dollar, such as the pound sterling and the euro,” the central bank said in a statement.
The dollar gained strength that month amid rising bets that the US Federal Reserve will proceed with a rate hike within the year, even as the timing was still uncertain whether it will be introduced during the November or December meeting.
The peso itself traded at sevenyear lows in October, moving in sync with other emerging market currencies.
In particular, remittances from OFWs in the United Kingdom slipped by 5.9% that month even as the amounts sent home rose by 16.5% when expressed in sterling terms, the BSP said.
Meanwhile, Filipinos from Italy, Germany, Greece, and the Netherlands actually reduced the money which they remitted to their families back home.
Despite October’s slide, the year- to- date tally still rose 4% year on year to $ 22.124 billion. This matches the central bank’s growth forecast, with remittances expected to hit a new high of $26.3 billion for the full year, after 2015’s $25.767 billion.
The United States remained the biggest source of remittances at $7.324 billion, or roughly a third of total inflows. Other sources of funds sent home by OFWs include Saudi Arabia ($2.159 billion), the United Arab Emirates ($1.755 billion), Singapore ($1.387 billion), the United Kingdom ($1.164 billion), and Japan ($ 1.12 billion), according to central bank data.
Guian Angelo S. Dumalagan, market economist at Landbank of the Philippines, said remittances are likely to recover between November and December due to the seasonal demand for the holidays.
“The annual decline in remittances may be temporary, and it might also be attributed to OFWs delaying their remittances in anticipation of further peso depreciation. Despite the decline, the BSP is still on track to reaching its $26 billion forecast, as remittances might rebound in November and December due to increased inflows in time for the Christmas season,” Mr. Dumagalan said via e-mail.
“Since at least 2011, December has posted the highest monthly cash receipts. If this trend continues, it could help the BSP reach its annual estimate for this year.”
Personal remittances, which include both cash and in- kind transfers of OFWs to their families here, accounted for nearly a 10th of the country’s gross domestic product in 2015, larger than the 8.5% share seen in 2014.
BSP Deputy Governor Diwa C. Guinigundo has said that remittances could potentially get a boost from the recovery of oil prices, as firms in the Middle East can afford to hire more workers given a recovery in profits.
Improving skill sets of Filipinos along with the emergence of more professionals are also likely to boost worker deployment abroad, the central bank official added.
A Trump presidency in the US is thought to pose a risk to remittances due to his “antiimmigrant” campaign promises, although it may be too early to tell whether such policies will materialize when he assumes office in January.